GB: CIPS/PMI Manufacturing Index


Mon Feb 02 03:30:00 CST 2015

Consensus Actual Previous Revised
Level 52.5 53.0 52.5 52.7

Highlights
UK manufacturing began 2015 on a relatively firm footing. At 53.0, the sector PMI was up 0.3 points versus a stronger revised December reading, higher than expected and also above its long-run average (51.5).

Output expanded for a twenty-third consecutive month mainly courtesy of buoyant domestic demand which ensured another increase in total new orders. However, within overall production, solid growth rates in both intermediate and investment goods masked a sluggish consumer sub-sector where output effectively stagnated. Export orders saw their first meaningful gain in five months and employment was up for the twenty-first month in a row.

Input costs fell sharply and purchase price deflation posted its steepest rate in more than five and a half years on the back of the slump in the energy market. Nonetheless, factory gate prices responded only marginally and, while recording only their second decline in the past five years, were only slightly down on their December level.

Despite the gentle uptick in January's PMI, activity rates in UK manufacturing remain well below the levels seen over the first half of 2014. Even so, comparisons with continental Europe remain generally very favourable which should be positive news for the pound. Oil price weakness all but guarantees falling input costs for the time being but the BoE MPC will be at least as focussed on wage developments. For now, the balance of UK growth and inflation should leave the monetary policymakers cautiously content but the monthly labour market reports will be of increasing significance over the course of the year.

Definition
The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.